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Pebblebrook Hotel Trust PEB

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Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Even Though Pebblebrook Saw Negative Cash Flow in Q1, Hotel Demand Starting to Trend Upward

Kevin Brown Equity Analyst

Analyst Note

| Kevin Brown |

Vaccinations across the country have yet to hit a level that allows hotels to return to profitability, so no-moat Pebblebrook Hotel Trust saw another period of negative earnings in the first quarter. The decline was in line with our expectations, leading us to reaffirm our $26 fair value estimate. Occupancy remained low at 18.8% in the first quarter, well below the 56.7% the company recorded in the first quarter of 2020 and 75.4% in the first quarter of 2019. Rate growth held up well despite the low occupancy level, only falling 3.8% year over year and 4.6% compared with the 2019 level. Still, the large occupancy decline led to a 68.0% year-over-year decline in revenue per available room, which is in line with our estimate of a 69.3% decline. Pebblebrook's expense reductions were also in line with our expectations, at 53.9% compared with our estimate of 54.8%. As a result, the company saw a hotel EBITDA loss of $15.1 million and produced an adjusted funds from operations loss of $0.42 per share in the first quarter, in line with our estimate of a $0.45 loss.

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Company Profile

Business Description

Pebblebrook Hotel Trust currently owns upper-upscale and luxury hotels with 13,235 rooms across 53 hotels in the United States. Pebblebrook acquired LaSalle Hotel Properties, which owned 10,451 rooms across 41 U.S. hotels, in December 2018, the company current Pebblebrook CEO founded in 1998, though management has sold many of those hotels over the past few years. Pebblebrook's portfolio consists mostly of independent hotels with no brand affiliations, though the combined company does own and operate some hotels under Marriott, Starwood, InterContinental, Hilton, and Hyatt brands.

Contact
4747 Bethesda Avenue, Suite 1100
Bethesda, MD, 20814
T +1 240 507-1300
Sector Real Estate
Industry REIT - Hotel & Motel
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 53

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